Sainsbury family stands by Davis for now

The Sainsbury family has given the embattled chief executive of the supermarket chain, Sir Peter Davis, a reprieve in his attempts to transform the business, but the clock is ticking for him to deliver results.

Although Sir Peter has the backing of the supermarket's 38 per cent shareholder for now, he accepts that he is under pressure to turn around the business over Christmas, a crucial trading period for retailers, sources close to the company said.

When he took the job at Sainburys he gave himself three years to transform the fortunes of the £5.2bn group. That deadline looms in March and Sir Peter is ready to admit defeat and leave the company if there are still no signs of improvement in its results next spring. Sir Peter met with representatives of the Sainsbury family trust on Friday, after he had told the City that sales had been disappointing over the summer. While many rival chains reported bumper food sales as Britons picnicked in the hot weather, Sainsbury's was beset by warehousing and IT problems that meant it could not stock its shelves properly. Like-for-like sales over the quarter fell 0.2 per cent, compared with high single-digit growth at Tesco and Wm Morrison.

But the family rallied to his defence and told Sir Peter that it was still happy with his stewardship of the company. "The family has consistently supported Sir Peter and his strategy," said a spokeswoman for the company.

The Sainsbury family has said that it has no plans to sell.